There is something far more interesting about the Amazon, Berkshire and JPMorgan Chase (let’s call them ABC) than the 1 million-plus lives they employ. There have been similar initiatives announced before along with countless business group on health coalitions that have made no meaningful dent in the wildly underperforming status quo healthcare system. The BUCAs (Blues United Cigna Aetna) have been adept at fighting off efforts like these. But this time, I predict it will be different. In this piece, I will explain why past efforts have failed. In a follow-on piece, I’ll explain why the ABC health initiative has great potential to be very unlike past employer-led efforts. Note: I reference my book, which can be found on Amazon or downloaded for free. See also: Open Letter to Bezos, Buffett and Dimon  10 reasons past efforts have led to failure:

1. No focus on healthcare industry business practices: As my business partner, a securities attorney with various securities licenses, often points out: Practices that are standard in healthcare would land him in jail in financial services. The staggering level of conflicts of interest and lack of disclosure is why the Health Rosetta community crowd-sourced the Plan Sponsor Bill of Rights (“plan sponsor” is a fancy term for employer/healthcare purchaser), Benefits Advisor Code of Conduct and Benefits Advisor Disclosure Form to establish new industry norms. Past efforts didn't seek to change industry norms. As long as these practices persist, there will be little change.
2. No sustained CEO-level champion: This translates into a lack of organizational backbone. One analysis of a past failed employer-led effort said, “The lack of available data has long prevented employers from figuring out where their biggest expenditures were coming from.” There is no freaking way Amazon CEO Jeff Bezos would accept that. It is a common trope for the BUCAs to say that the claims data they process for self-insured employers (roughly two-thirds of the workforce) is proprietary to the BUCA. That’s laughable on its face, but most employers back down despite the absurdity of that claim. Clearly Bezos and Berkshire CEO Warren Buffett have shown they are long-term-oriented for strategic initiatives.
3. BUCA fiduciary duty has trumped employer fiduciary duty: As a BUCA executive put it to me, “We (BUCA) are legally required to enable price gouging by hospitals.” I outlined the reasons why in Chapter 3 of my book, What You Don’t Know about the Pressures and Constraints Facing Insurance Executives Costs You Dearly. This dynamic is in direct conflict with employers' fiduciary duty as I outlined in Chapter 19 of my book, where I quoted a Big Four risk management practice leader, “ERISA Fiduciary Risk is the Largest Undisclosed Risk I’ve Seen in my Career.” There are two areas of legal jeopardy that are now snapping CEOs to attention. Chapter 7, Criminal Fraud is Much Bigger Than You Think, is just the tip of the iceberg on ERISA fiduciary risk, but it is so blatant that we’ve heard dozens of cases in the works triggered by the lack of oversight. An additional thread of fiduciary legal front is emerging -- activist shareholders are realizing how straightforward it is to slay the healthcare cost beast and improve earnings. Sadly, for many corporations, the only thing that spurs action is a legal target on their back. There is a simple calculator that translates removal of healthcare waste into market cap impact. Here's one example of something that has already happened: A multinational manufacturer simply implemented one proper musculoskeletal management program by having physical therapists working with employees and workplace ergonomics. This is translating into $2 billion of market cap impact (calculate savings times price-earnings multiple). One of the foremost experts in employer benefits, Brian Klepper, estimates that 2% of the entire U.S. economy is tied up in non-evidence-based, non-value-add musculoskeletal procedures. [See Chapter 12, Centers of Excellence a Golden Opportunity, for more]
4. Coalitions co-opted: Too many business coalitions on health are supported by limited funding from employers, so they seek sponsorship from the very players whose business imperative is to redistribute money from employers to the healthcare industry incumbents. The people running these coalitions typically walk on eggshells trying to avoid offending their sponsors, and nothing substantive changes. Some have meaningful revenue streams from incumbents that largely perpetuate the status quo at a slightly better price.
5. Threats of business reprisal: I’ve heard of many instances where a BUCA threatens an employer's revenue. BUCAs book lots of hotel rooms, buy lots of computer hardware, etc. Any effort to rein the BUCA in is fought furiously. Often the CEO of the employer isn’t even aware that it has happened. The risk-averse HR/benefits leader simply backs down out of fear there will be internal blowback for jeopardizing revenue, and the dysfunction persists. The message that CEOs implicitly or explicitly send to HR/benefits leaders is, “Keep our people happy and don’t get us sued.” In other words, a guarantee of risk aversion.
6. Employer groups keep their “deals” proprietary: Classic short-term thinking. The employer may gain some short-term advantage and can claim a “win,” but the overall market they operate in remains unchanged. It is a key part of BUCAs’ divide-and-conquer strategy. Even a huge employer normally has a small usage share in a given market, so their impact is muted when the BUCA holds their deal terms proprietary rather than establish new market norms available to all employers.
7. Lack of rethinking of healthcare payment and delivery: Most so-called innovation in healthcare is the equivalent of trying to optimize oil lamp technology to get better lighting in homes and cities. Or, putting recycling bins in a coal plant and calling it "green energy." The healthcare system has become a Gordian Knot designed by Rube Goldberg built up over the last 100 years. Those of us working on the Health Rosetta blueprint and Health 3.0 vision recognize that it is time for a reset. That approach has allowed smart employers to spend 20% to 40% less per capita with superior benefits and outcomes.
8. Primary care ignored: As I pointed out in the open letter mentioned above, you can’t have a functioning healthcare system without proper primary care. Primary care has been brutally undermined. To the extent there has been focus on primary care, it has been to pile some niceties on top of a fundamentally flawed model. As one primary care innovator put it, putting wings on a car doesn’t make it an airplane. Having written the seminal paper (summary, detailed) on direct primary care (DPC) five years ago, I find it striking how few benefits professionals have heard of DPC, let alone adopted it. Value-based primary care couldn't be more different than the drive-by, hamster wheel primary care that has become the dysfunctional norm.
9. Lack of supply chain mindset: Most employer-led efforts have not rolled up their sleeves because they are working on the mistaken assumption that healthcare is too complicated to tackle themselves. That is only true if you do not apply the proper resources. As a single company, Caterpillar applied a supply chain mindset (something Amazon has in spades) to their drug spending and fired middlemen who were not adding value. Seemingly every company says employees are their most important asset. Considering that health benefits are typically the second biggest cost after payroll, why wouldn’t a company want to ensure they get the greatest payback by carefully managing their healthcare supply chain? In Chapter 9, You Run a Health Care Business Whether You Like it or Not, I detailed how IBM’s mindset shift had the dual benefit of lower healthcare costs and a high-performance workforce.
10. Lack of moral standing: Past employer efforts have not articulated a compelling reason that clearly benefits the best interests of the public and their employees. Rather, past initiatives were easy to perceive as antiseptic corporate blather meant to enhance their bottom line. Thus, it is easy to position the employer as the bad guy. For example, as I pointed out in my open letter to Bezos, Buffett and JP Morgan CEO Jamie Dimon, employers are the key enabler of the opioid crisis. Thus, it can’t be fixed without a major shift by employers (see Chapter 20, The Opioid Crisis: Employers Have the Antidote). Facing the largest public health crisis in 100 years, there is a moral imperative to address this situation. Taking leadership on this issue solves an internal issue (no doubt, ABC employees are afflicted with opioid overuse disorders at the same rate as the general public) while tackling a much broader societal issue.

In all of the case studies in my book, the employers treated their employees like adults and explained what was going on at a macro (see the "bigger bite" graph) and micro level to explain how they wanted to ensure their teams could achieve the American Dream. Successful employers point out that healthcare is blocking the American Dream for 60% of the workforce. The math simply doesn’t work: 60% of the workforce makes less than $20 per hour, and the average family of four premiums are $26,000; in addition, greater than 50% of households have less than $1,000 in savings (largely due to healthcare costs), and more than 50% of the workforce has over a $1,000 deductible. See also: Whiff of Market-Based Healthcare Change?   It’s no wonder that Buffett called healthcare the tapeworm on the U.S. economy. The handwriting was on the wall following the Michigan primary that showed that populism was being driven, overwhelmingly, by healthcare’s hyperinflation as was pointed out in Healthcare Drives Middle Class Economic Depression & Trump/Sanders Campaign Success. In the follow-on piece, I’ll outline how the ABC health initiative has the potential to have as big an impact on U.S. healthcare as the Affordable Care Act. I leave you with a quote and a slide from a presentation I gave recently that will give a preview of the opportunities available for this new initiative. Note how little of every dollar goes to the value creators in healthcare.

"Your margin is my opportunity.” - Jeff Bezos

While much of the media attention has been focused on the race among nations to develop the most powerful artificial intelligence systems, an equally crucial race has been heating up: the race to build the first working quantum computers. As progress in the field accelerates at an exponential rate, 2018 should see an avalanche of breakthroughs. It is a race for “quantum supremacy,” when a quantum computer demonstrably and markedly outperforms a classical supercomputer for any class of problems. Booth Google and IBM, two leaders in quantum computing, have laid out plans to achieve this goal. Intel  also has a horse in the race, announcing a new 49 qubit neuromorphic chip designed for quantum computing research. See also: Digital Transformation: How the CEO Thinks   The stakes are enormous. Quantum computers promise to set a new paradigm for solving some of the hardest math and computing problems today—problems such as analyzing the interactions of multiple genes in health outcomes, modeling the energy states of chemicals and predicting the behavior of atomic particles. They also might make the internet inherently insecure by quickly cracking modern cryptography used to lock our IT infrastructure and the web. One thing is for sure: The era of quantum computing is coming on soon, and the world will never be the same. Put simply, quantum computers use a unit of computing called a qubit. While regular semiconductors represent information as a series of 1s and 0s, qubits exhibit quantum properties and can compute as both a 1 and a 0 simultaneously. That means two qubits could represent the sequence 1-0, 1-1, 0-1, 0-0 at the same moment in time. This compute power increases exponentially with each qubit. A quantum computer with as few as 50 qubits could, in theory, pack more computing power than the most powerful supercomputers on earth today. This comes at a timely juncture. Moore’s Law dictated that computing power per unit would double every 18 months while the price per computing unit would drop by half. While Moore’s Law has largely held true, the amount of money required to squeeze out these improvements is now significantly greater than it was. In other words, semiconductor companies and researchers must spend more and more money in R&D to achieve each jump in speed. Quantum computing, on the other hand, is in rapid ascent. One company, D-Wave Systems, is selling a quantum computer that it says has 2,000 qubits. However, D-Wave computers are controversial. While some researchers have found good uses for D-Wave machines, these quantum computers have not beaten classical computers and are only useful for certain classes of problems—optimization problems. Optimization problems involve finding the best possible solution from all feasible solutions. So, for example, complex simulation problems with multiple viable outcomes may not be as easily addressable with a D-Wave machine. The way D-Wave performs quantum computing, as well, is not considered to be the most promising for building a true supercomputer-killer. Google, IBM and a number of startups are working on quantum computers that promise to be more flexible and likely more powerful because they will work on a wider variety of problems. A few years ago, these flexible machines of two or four qubits were the norm. During the past year, company after company has announced more powerful quantum computers. In November 2017, IBM announced that it has built such a quantum machine that uses 50 qubits, breaking the critical barrier beyond which scientists believe quantum computers will shoot past traditional supercomputers. The downside? The IBM machine can only maintain a quantum computing state for 90 microseconds at a time. This instability, in fact, is the general bane of quantum computing. The machines must be super-cooled to work, and a separate set of calculations must be run to correct for errors in calculations due to the general instability of these early systems. That said, scientists are making rapid improvements to the instability problem and hope to have a working quantum computer running at room temperature within five years. And here’s where the confluence of quantum computing and AI looks so promising. As we are seeing the first major impacts of wide-scale artificial intelligence, we are also realizing that classic semiconductor-based computing limits our ability to solve the biggest problems that we had hoped artificial intelligence could tackle. They expect quantum computers to start performing very useful calculations well before they’re ready to leave the freezer. See also: 7 Steps for Inventing the Future   Quantum computing promises to step into that breach and provide the rocket fuel needed to solve these grand challenges. Precisely targeted medical treatments, radically cheaper energy production and new types of super-strong materials are all breakthroughs that quantum computing could make possible by performing billions and billions of calculations simultaneously in a relatively small package. Google researchers demonstrated the promise when they used quantum computing to simulate the electron structure of a hydrogen molecule, a key step toward moving chemical design from empirical measurement and educated guesses to more proper engineering and simulation. (This will also work for drug discovery.) The perils of quantum computing are also real. Quantum computers will be able to easily crack most forms of encryption in use today (although security experts are already at work on creating codes that are not crackable by qubit attack). Should Russia or China, for example, gain quantum computing dominance—which is entirely possible—they could use their advantage for even more sophisticated hacking and decrypting of encoded communications. Between governments, big companies, startups and university labs, some of the brightest engineering minds are rushing toward quantum supremacy. This literally could shift the global balance of power. This article was written by Vivek Wadhwa and Alex Salkever.

The insurance industry continues to invest heavily in transforming their legacy policy, billing and claims applications. But are carriers actually realizing what was promised to the business? Core transformation can be so much more than a legacy technology replacement. In our experience, many projects fail to fully realize their potential benefits due to three common oversights:

• Digitization without differentiation – Projects that simply upgrade their core systems but fail to change the customer engagement.
• Limited focus on information data – Too much focus on transactional data elements and not using a comprehensive informational data approach.
• Failure to foster innovation – Modernizing applications but failing to leverage these tools to support continuous improvement and innovation.

In fact, 67% of insurance respondents to PwC’s 2017 CEO survey see digitalization and innovation as very important to their organizations. Specific to the insurance industry, CEOs noted that the area they would most like to strengthen to capitalize on growth opportunities is digital and technological capabilities, followed by customer experience (reflecting the connections between the two). Insurers are looking for more than just modernization of core systems. They expect a successful digital, analytics and organizational transformation that can enable them to unlock the full potential that a core transformation has provided to them. Carriers should be asking themselves the following questions to determine if they’re achieving the full benefits of expanding beyond core. Is the organization:

• Leveraging the new platform to change the customer engagement model?
• Leveraging analytics-based insights with a clear vision and plan to translate that into value based capabilities?
• Promoting continuing innovation – both internally and to customers?

Key opportunities beyond core

• Digital differentiation: Putting the customer at the center of the business is a driving success factor for any core transformation effort. With the maturation of customer portals and digital platforms, insurers can now focus on customizing the digital layer while retaining the back-end core systems as out of the box as possible.
• Data and analytics: As the volume of data has grown, insurers have implemented new big data technologies and reporting structures. The challenge remains to translate data into insight, and we have seen an emerging trend of establishing a chief digital officer and corresponding analytics business units that can span across the various data silos and business units.
• Innovation: Within the context of innovation, a significant majority of carriers dedicate 1% to 5% of their IT budgets to research and development (R&D). We believe carriers should pursue a two-pronged approach to innovation that leverages both internally generated innovation as well as strategic partnering with emerging insurtech companies.
• Insurtech: Carriers should think beyond their internal businesses to identify and collaborate with an increasingly robust insurtech community of startups. This will allow carriers to implement innovative technologies through a combination of partnering strategies.

See also: Insurtech in P&C: It’s Not About the Tech   Digital differentiation We have seen a significant maturation of portal and digital platform offerings in the market in the past two years. This shifts the balance for carriers that now have the ability to leverage commercially available offerings that previously required custom builds in-house or through extension of the core policy, billing and claims products. What this means for carriers is that digital strategy can now complement the core transformation journey. Carriers are now pursuing a “digital first” strategy that places the customer value proposition first when prioritizing project work. In this model, the core application’s UI / UX is kept nearly out of the box, with the focus of UI / UX customization performed on the digital layer. We believe this approach results in the best of both worlds, resulting in a highly conforming set of core systems and a carrier-unique digital experience delivered through the custom digital layer. To achieve these goals, projects should:

• Leverage commercially available digital products as the foundation for your digital layer;
• Implement APIs between the back-end core applications and the digital layer;
• Leverage the enterprise digital layer for all external-facing interactions, including intermediaries and customers.

Insurers are placing greater emphasis on their digital offerings as a key customer differentiator, shifting customization from the core applications to the digital layer. Data and analytics Big data implementations have hit a critical mass, with nearly all carriers either pursuing a data lake-style implementation or planning one. Carriers that have implemented big data implementations have benefited from faster enterprise-level deployments, but at a cost of retraining the data and analytics business units. In some cases, these projects have shifted the reporting development to the respective business units, which must up-skill to support this previously IT-led work. We have also observed a growing trend of the chief digital officer (CDO) and the creation of a specific analytics business unit within organizations. This reflects the belief that data is no longer the domain of individual siloed business units, and carriers must now use data cross-business to achieve true customer insights. Finally, carriers are now looking at new monetization opportunities as a result of their data stewardship. For example, one international carrier is now investigating how to monetize their supply chain data for automobile repair networks. Other possibilities include data provider relationships with original equipment manufacturers and even competitors who may use the carrier’s repair cost history to better price risks in the local market. Trends in data and analytics include the introduction of new big data tools and techniques, new business units to leverage data across the enterprise and a renewed focus on monetization of insurers' data. Innovation We make a distinction between “invention,” which represents the creation of a capability versus “innovation,” which is the application of that invention to the marketplace. For insurers, invention is rare and generally coincides with a change to both the technology and regulatory landscape (e.g., credit scoring). Insurers should focus on innovation and how to leverage emerging technologies and evolving customer expectations into your business. Insurers that lead in innovation exhibit the following traits:

• A mechanism to capture innovative ideas across the enterprise (e.g. innovation workshops, targeted interviews from front-line employees, etc.);
• A project funding and prioritization structure that links new ideas to internal capital budgeting and executive priorities;
• A willingness to fail early and often. For example, Google X (Google’s innovation arm) gives employees incentives to end a project early if it makes sense to do so.

The good news is an emerging insurtech ecosystem is growing, which allows insurers access to a pool of experimental projects and partners. Insurers should look to implement a two-pronged innovation model that includes internally derived innovation as well as a partnership model with leading insurtech vendors. Insurtech The exponential growth of insurtech funding and company formation reflects the belief that the insurance space is ready for transformation. Because the insurtech ecosystem is still evolving, it will remain unclear who will ultimately become leaders within the space. As a result, insurers should look to a combination of partnering models to hedge against an uncertain future. Some models we have observed include:

• Joint venture – The insurer and insurtech company form an exclusive joint venture. The insurer provides seed capital and is able to influence the insurtech more greatly than in other models.
• Strategic partnership – The insurer takes a leadership role in partnering with the insurtech, usually at favorable economic terms with the goal of growing the partnership over a longer period.
• Acquisition – The insurer makes a strategic acquisition. This is a less common model due to the capital required and concern about the effect a merger may have on the acquired company
• Service provider – The insurtech is considered a provider and works on a pre-defined contract term. This model may be pursued for smaller proofs-of-concept or for new products the insurer is experimenting with

Regardless of the partnering model, we have seen both life and P&C carriers successfully work with emerging insurtech companies to roll out innovative products and features. In the life space, the use of health-tracker-style devices, apps and policy discounts have helped move insurers to a health-monitoring and lifestyle adviser. See also: P&C: Back-End Systems Unite!   Insurers should look to leverage insurtech opportunities to continue to broaden their customer value proposition, both through increased customer touch points and risk management features. Implications

• Digital experiences, not the back-end core application, are the true customer differentiator. As a result, insurers should look to establish a customizable digital platform that interacts with a nearly out-of-the-box set of back-end core applications.
• Data and analytics will both increase in volume and frequency, requiring carriers to look across individual business units and data silos to form truly actionable customer insights.
• Innovation will originate internally within the company, but also from an emerging insurtech ecosystem of companies.
• Insurtech is still evolving ,and picking winners will be difficult. Insurers should look to a combination of partnering models to ensure the best trade-off of engagement and risk.

This is part one of four. You can find the full report here. In this new four-part series, we explore how your people can be your secret weapon in the next phase of tech-driven insurance transformation. With insights from Bullfrog Ventures' Hilario Itriago and Ana Rojas Matiz. Part I: What is the “people challenge,” and why is it important for today’s financial-services organizations? It can be tempting as a large company to try to buy your way to success, using your clout and deep pockets to cherry-pick successful innovations as they prove themselves, either from your own incubator program or from the wide-open sea of startups. This spares you plenty of awkward growing pains – because you’re not growing components organically but rather grafting them on from the outside. However, while corporate growing pains are well-documented, encompassing everything from duplicated work to failures to understand the customer, grafting pains – as we might call them – are less so …. What can go wrong, then, when little meets large, when startups or their tools are welcomed into their new home at large incumbents? What often happens – and there is plenty of anecdotal evidence to support this – is that the resultant outfit is worth less than the sum of its parts, and what looked like a good sum on paper does not end up paying for itself, and more. Somehow, marooned in the corporate lagoon, the wind goes out of a startup’s sails …. Or maybe a new tool, for all that it promised to revolutionize the business, simply slips unobserved into the rut vacated by its predecessor. However we choose to frame it, this process is far from mysterious and can be summed up in a single word: people. To find out more about insurtech’s people challenge, Insurance Nexus spoke to Hilario Itriago and Ana Rojas Matiz at Bullfrog Ventures, a leading international insurtech consulting firm driven by a strong focus on talent and leadership development as it brings both startups and its own capabilities to incumbents. See also: Strategies to Combat Barriers to Insurtech   "As insurtech becomes more and more embedded within the new insurance world, there are so many different things happening in so many different territories… and the one thing we haven’t said is: Are we preparing people to take advantage of all that?" says Hilario, Bullfrog’s CEO and co-founder. "And do we know who is the best person to do what as those things come our way? That’s the critical thing that needs to be addressed. Because even yesterday´s best day-to-day performers will need to be developed for today’s opportunities, and fast!"  In basic terms, there must be a solid bridge – solid communication – between old and new, a forceful individual who can drive the agenda of the new team/tool into the host company and vice versa. While this champion role is perhaps the keystone, there are many other moving parts that need to mesh, and the better-suited and -equipped the individuals and the team are at each point, the more successful the integration will be. Like any healthy graft, a smaller team or tool that is being connected to a larger organism needs to be connected artery-to-artery, vein-to-vein and nerve-to-nerve. None of this is to suggest that insurers should eschew the "external" route of innovating through acquisitions, accelerators and partnerships – indeed, it is this very people challenge that underlay the rise of external innovation channels in the first place. The people challenge represents one of the prime reasons for purely internal innovation programs rarely getting off the ground. And, with change coming thicker and faster than ever before amid today’s fintech and insurtech explosion, it is simply not feasible for incumbents to attempt everything themselves – so we will only see more work with incubators and third-party tools going forward. The winners in this race will not be those that shun outside innovation but those that make optimal use of it on the ground – by deploying the right people in the right places for the right causes. This raises an interesting point regarding where insurers over the coming years should locate their competitive advantage. There are obviously plenty of "hard" advantages that insurers can make good on, like having more data or better in-house actuarial modeling than competitors. However, in many areas, the trend is toward using best-of-breed third-party tools. Take the connected home, where many insurers are steering clear of the device-manufacture and white-labeling route to throw their weight behind an open ecosystem approach – with the key advantage that their solutions will have a greater present and future footprint, and the key disadvantage that nothing stops their competitors from getting this too. And this approach often extends up the stack to the software, as well, much of which is no more exclusively owned than the hardware. Insurance propositions in particular (and carrier businesses in general!) are therefore coming more and more to resemble Frankenstein’s monsters, superficially their own thing but in fact made up of dozens of other people’s widgets, layers and protocols. Technological wizardry represents competitive advantage to software houses and manufacturers; insurers, on the other hand, are really active in the field of proposition creation, competing against one another to stitch other people’s components together into the most powerful stack …. It’s not as if the world’s best chefs grow their own food; they operate with the same publicly available fodder as the rest of us, just with greater knowhow. The above is, of course, an oversimplification, but insurers are nevertheless justified in recognizing in their people and staff knowhow, which are so easily dismissed as commodities and overlooked, a major source of competitive advantage, especially with today’s insurtech, incubator and innovation-hub stew coming to the boil over the next five years. See also: Next for Insurtech: Product Diversity And, while advances in insurance technology continue to astound, much of this technology will – from a carrier perspective – be commodity soon enough. There is absolutely no shortage of amazing tools entering the market, nor is there a dearth of new graduates and experienced hires with the technical expertise to deal with them. But the more powerful these technologies become, the more that rides on the supporting infrastructure, on the facilitating roles and individuals within organizations. As Hilario says: "Innovation requires change, and change needs leadership. My full conviction is that if an organization is going to make people a critical component of the excitement of a project driven by a new technology, then it needs to have as much focus on assessing its individuals, its talent and its team members as it has on investing in the new technology." It is as if, with each technological advance, the handle of the axe grows longer, adding untold striking power but requiring progressively more sleight of hand from the lumberjack. The industry needs a new approach to talent and change management. But before we explore what this might look like, as well as the future evolution of the HR function, let us take a quick look at some of the key problems undermining current models. Stay tuned for our next post on the limitations of prevailing approaches to talent development and change management... Or, if you'd like to access the full report straightaway, simply download it for free here. Send me my complimentary report copy now!

The Ice Age! The Ice Age movie franchise that centered on a group of mammals surviving the Paleolithic ice age produced five films: "Ice Age," "Ice Age: The Meltdown," "Ice Age: Dawn of the Dinosaurs," "Ice Age: Continental Drift" and "Ice Age: Collision Course." These movies reflect what we are seeing today in insurance and what we described in the blog, An Ocean Apart: Pre-Digital and Post-Digital Insurance Models. In that blog, we described the breakup of Pangaea (meltdown), a supercontinent formation that reset and reorganized the world’s continents, oceans and seaways (dawn and continental drift) and the subsequent elimination and survival of species (collision course). The breakup disrupted the world while creating one that would ultimately shape the future. The Digital Age! We are experiencing disruption due to people, technology and market boundaries (meltdown), a new insurance paradigm of innovative products and business models (dawn and continental drift) and the potential irrelevance and survival (collision course) of insurers as a result. Regardless of whether incumbent insurers choose, or are able, to play in a new digital age, Digital Insurance 2.0 is here in full force! At the heart of the digital age is a shift from Insurance 1.0 in the past to Digital Insurance 2.0 for the future. Insurance 1.0 business models of the past 50-plus years have been based on the business assumptions, products, processes and channels for the Silent and Baby Boomer generations. Gen X was the first generation to begin the shift with the introduction of personal computers and the Internet as early indicators of the future digital age. Today, millennial and Gen Z influence is intensifying, shifting the fundamental business models of all businesses, including insurance, by demanding the use of digital technologies and new products and services that align to their demographics, needs and expectations … creating Digital Insurance 2.0. The Customer Is at the Center of the Digital Age Shift In our 2016 report, The Rise of the New Insurance Customer: Shifting Views and Expectations: Is Your Business Ready for Them?, Majesco published insights based on primary research we designed to capture the views and expecta­tions of consumers across generational groups. Our goal was to compare perceptions of insurance with other businesses and industries to understand how other businesses’ digital shifts may be influencing insurance expectations. The research took a deep dive into consumer perceptions of insurance across the spectrum of researching, buying and servicing. The results indicated that insurance is ranked consistently last or nearly last in “ease of doing business” compared with other businesses. See also: How to Move to the Post-Digital Age?   This year’s consumer research, The New Insurance Customer – Digging Deeper: New Expectations, Innovations and Competition, built on the 2016 insights by assessing year-on-year behavior changes and by diving deeper into the disruptive implications of expectations, innovations and competition for new insurance products and business models. These have emerged into the market via insurtech startups and traditional insurers. The research decomposed these products and models into their component parts and measured reactions to them across the generations, providing insight into the impact and potential of the innovations and competition on the industry. These insights point toward an insurance industry that will rapidly intensify and accelerate changes and disruptions that are already underway. Further insights from the new research reinforce the view that change is being forced on insurers, whether they like it or not. The traditional insurance products, services and processes of Insurance 1.0 do not conform to what the next generation of insurance buyers, millennials and Gen Z, and even the older generations expect from their interactions with insurers. While there has been a lot of focus and discussion on the millennial generation, even with some startups specifically targeting them, Gen Z is even more digitally oriented. New Expectations, Innovations and Competition Within the industry, there is much discussion and debate about whether these new products and business models are “real” and will succeed. Based on the survey, there is strong indication that many will succeed, which will, in turn, intensify the momentum of the shift toward Digital Insurance 2.0. Majesco’s new consumer research clearly identifies this growing gap. Some of the highlights include:

• There was year-on-year acceleration of behaviors and experience with technology and trends that is intensifying the generational gap between Insurance 1.0 and Digital Insurance 2.0, highlighting the split in experience levels between Gen Z + Millennials and Gen X + Pre-Retirement Boomers.
• During the same timeframe, we measured declines of 10 to 15 percentage points across all generations on not trying any of these new digital behaviors or expectations. This means that all generations are dipping into digital behaviors with increasing frequency.
• The behavior and expectation increases have driven significant interest in innovative products and channels for insurance, with millennials leading the way.
• There was strong interest in most of the 30 new Insurance 2.0-related attributes covered by the survey, particularly for the younger generations of Gen Z and millennials … the next generation of buyers.
• Gen Z “breaks out” in a number of areas, surpassing millennials and setting the stage for further acceleration in adoption.
• Embracement of new Digital Insurance 2.0 business models already operational in the market is strong among Gen Z and millennials, positioning these early market entrants to capture both market and mindshare.
• When we asked about new models such as P2P, on-demand, embedded insurance and others, a pattern emerged, with the Gen Z and millennials aligning more with the new business models and products, highlighting their propensity to switch insurers to match models that fit their expectations and lifestyles.
• We discovered variations in behaviors and expectations where sub-segments of each generation align more closely with either Insurance 1.0 or Digital Insurance 2.0, highlighting the need for options and personalization that can be achieved through behavioral targeting and niche products.

What Should Insurers Do? Insurers must aggressively begin to plan and act on these shifts, rather than being educated observers. Each day, we see products introduced, channels established, new services offered, business models launched and much more. These innovations and competition, based on this new research, will rapidly capture the market share of the millennial and Gen Z generations, while also bringing along some of the older generations. Unfortunately, too many insurers are taking a page from their old business transformation playbooks and expecting it to work in today’s digital age. Instead, insurers need to look outside their companies to a new cadre of digital leaders and imagine the art of the possible. They must rapidly position themselves in the digital era of Digital Insurance 2.0 to:

• Accelerate digital transformation to become digital era market leaders
• Accelerate innovation with new business models and products
• Accelerate ecosystem opportunities and value
• Avert disruption or extinction by new competition within and outside the industry

Time is of the essence. The days of being a fast follower will no longer work because of the rapid and disruptive shift. Traditional insurers whose businesses are built on the Insurance 1.0 model will struggle to remain relevant as the older generations decline, while businesses built on the Digital Insurance 2.0 model for the new generations increase. The ever-widening gap between competitors that are innovating and shifting to Digital Insurance 2.0 and those that are not will become insurmountable, putting traditional insurers’ futures at risk. See also: 3 Ways to Leverage Digital Innovation   Digital Age insurers will be competitively prepared to survive the drifts, collisions and rebirth of insurance markets, and they will reach a new level of optimism in the coming years. They will be the ones writing insurance history, playing starring roles in insurance market sequels and riding the waves of risk to new insurance adventures.

Last week's announcement of a healthcare venture by Amazon, Berkshire Hathaway and JPMorgan Chase may finally shift the debate in the U.S. in what I firmly believe is the right direction.

The debates on the Affordable Care Act and then on "repeal and replace" have largely focused on who pays for care. The real issue is the incredibly high cost of care in the U.S. If we can start to fix that problem, then the issue of who pays becomes easier. If we don't, the issue of who pays will keep getting hairier. And the venture could take a whack at healthcare costs, first for the three companies' employees, then for the whole market.

In theory, health insurers use their size and market power to keep prices down. In fact, health insurers have basically become a tax on the system. Whatever healthcare costs are, insurers get their 20%. Yes, insurers have incentives to push back on individual claims—many of us have learned the hard way—but the higher that costs are in the aggregate, the more the insurers earn. Netting 20% of $1 trillion a year is great, but why stop there if you can collect 20% of nearly $4 trillion? (Healthcare spending was $3.3 trillion in the U.S. in 2016, or 18% of GDP, and is still increasing rapidly. That percentage is roughly twice as high as in other major Western countries, even though Americans consume about as much medicine and services and have relatively low life expectancy.)

Pharmacy benefit managers (PBMs) were, likewise, supposed to protect us on prices, but they've been co-opted, too, by the immense profits to be had. Rather than just negotiate drug prices on behalf of employers and health plans, the PBMs now take payments from all comers, including drug makers—and the U.S. pays prices roughly twice those in other major countries.

Other ideas have been floated, notably "consumerization"—making consumers more accountable for their care by assigning them responsibility for some portion of every payment, while giving them far more information than they have now about prices and the quality of caregivers and value of medicines and procedures. That approach makes some sense, but it requires changing the whole system—and the system will fight back. Patients' cost are the system's revenue, and it has become so large and powerful that it will battle as hard as can be to protect that revenue. 

The best idea I've seen, the one that could actually be the point of the spear that pierces the healthcare system's armor, sounds rather like the Amazon/Berkshire Hathaway/JPMorgan Chase deal (which some are calling ABC, after Amazon, Berkshire and Chase).

The notion is that employers—initially, big employers—can lead the way on a form of consumerization because they have both the right incentives and the right scale. Individual consumers carry no particular weight, and we can hardly be expected to sort out the mind-boggling complexity that is healthcare. But big employers that self-insure can hire expertise to negotiate directly with providers and get better prices than if the employers rely on health insurers and pay the middlemen their 20%. Big employers can also draw on their data analytics expertise to measure outcomes and locate the best treatment for employees through programs such as Centers of Excellence. Prices may well be higher for these highest-quality providers, but the centers avoid unnecessary treatment (not something that a revenue-maximizing system is especially good at policing) while providing care that is more likely to be right the first time; that both avoids cost and reduces complications for patients. Employers can also cut through the fog that cloaks drug charges and insist on better prices either from PBMs or directly from makers.

Essentially, big employers kick insurers out of the picture and go toe to toe with healthcare providers and PBMs to both lower prices and improve care. That's the theory, anyway.

The details about ABC, while still sketchy, suggest it is the best example thus far of this approach. If ABC works, and other examples follow, they might just provide a market-based solution to a major drag on Americans. Individuals would initially be left out, but some way could eventually be found to let them benefit from the prices negotiated by corporations or Medicare.

There are, of course, plenty of reasons to be skeptical. If you'll allow me, ABC isn't as simple as A, B, C. Even if the deal works as advertised, what's to stop the combined companies from becoming just another power that jacks up healthcare prices for individuals while working for their own benefit? Amazon's Jeff Bezos, Berkshire Hathaway's Warren Buffett and Chase's Jamie Dimon aren't exactly known for turning down profits. 

Still, for now, let's call ABC progress and keep a close eye on where it goes. That's pretty much the initial take among our thoughts leaders, three of whose articles on the subject I've included below. (One, Brian Klepper, has organized an impressive array of thinkers on a listserv on healthcare costs that has done much to shape my thinking.)

I'll keep my fingers crossed. If this approach doesn't work....

Have a great week.

Paul Carroll
Editor-in-Chief

On the surface, it may seem redundant to think that underwriters are averse to loss. After all, our job is to make sure the policies we write for our respective companies earn more in premium than the claims and expense dollars that are paid. Yet, the cognitive bias of loss aversion is more nuanced, and recognizing the bias at work can help us avoid making ill-advised underwriting decisions. In the 1970s, researchers Daniel Kahneman and Amos Tversky began exploring how biases affected decision-making, and went on to formulate what is known as Prospect Theory. At a high level, Prospect Theory found that, when people faced a choice that resulted in either a loss or a gain of the same amount, the displeasure resulting from the loss was far greater than the benefit derived from the gain. Simply stated, losses loomed larger than gains. Picture the following coin-flip scenario:

• If the outcome is tails, you’d lose $100
• If the outcome is heads, you’d win $150

Would you take the bet? For most people, the fear of losing $100 outweighs the chance of winning $150, even though the expected value of the gamble is positive. To me, this example of the loss aversion bias feels like one of the more salient references to underwriting. Underwriting, in essence, is like a coin flip in the context that a bound policy either will or won’t have a loss. Quite often, we are faced with making judgment calls on challenging risks that do not come with a clean history. We are armed with supporting qualitative or quantitative information about the risk (i.e., affirming the “positive expected value” of the gamble), but it’s still possible that prior losses exert enough influence in the decision-making process that you must decline the submission. See also: How Underwriting Is Being Transformed   Additional caveats of Prospect Theory hold that decisions involving loss and gain are framed around a reference point, which is quite often neutral (or zero). Moreover, subjects in Kahneman's and Tversky’s studies experienced diminishing sensitivity to both gains and losses. Essentially, an increase in income from $100 to $200 has more of an emotional impact than an increase from $1,000 to $1,100. Consider the following choices:

• • A sure gain of $3,000, or an 80% chance to win $4,000

And separately,

• A sure loss of $3,000, or an 80% chance to lose $4,000

For the gambled portion of both choices, the expected value would be positive $3,200 in the first choice and negative $3,200 in the second. With this in mind, the wager in “a” and the guaranteed outcome in “b” would appear to be the logical pick. However, Kaheman's and Tversky’s research found the opposite: For choice “a,” the majority of subjects went with the sure gain, while for choice “b” most people chose the riskier option. Importantly, different behavior was observed on both sides of the reference point of zero. With this in mind, as well as knowing that losses are felt more than the same gains, their subjects’ behavior was described as risk-averse for gains, and risk-seeking for losses. What comes to mind is the racetrack bettor who is having a bad day and decides to wager big on the long shot during the last race in an effort to recoup his earnings. He has a shot to break even and feels that it is wise to take it, despite the slim chance the horse has to win. Does this happen in underwriting? Think of your production budget in the framework of situation “b” above. For added emphasis, imagine that the account you have on your desk will be the last one you’re working on before the quarter closes. Binding it would put you at plan, but not writing it would leave you short by 10%. What’s more, according to your metrics, this account is barely profitable, and you realize the price your broker is telling you to meet is deficient. Do you push to write it? Do you go all in on the long shot? In this hypothetical example, the “loss” isn’t in the context of whether the specific account would earn an underwriting profit. The reference point here pertains to the potential budget shortfall. The underwriter has to decide whether to display sound judgment and pass on the risk, only to fall short of plan (a sure loss), or attempt to write a below-average account that might enable him or her to meet plan (a chance at no loss). Kahneman's and Tversky’s findings might suggest that making the proper underwriting call in this case would be difficult, because we’re risk-seeking for losses. See also: Risk Management: Off the Rails?   Now flip this scenario on its head. What if you have already exceeded plan? Couldn’t this be construed as a sure gain? Recall that, due to diminishing sensitivity, additional gains lose their luster. So, are you motivated to pursue additional opportunities (a chance at a greater gain) knowing that you’ve already “won” for sure? Or does complacency set in, resulting in foregone revenue? Remember, we tend to be risk-averse for positive outcomes. Therefore, we need to be aware of the potential impact of our cognitive biases, such as loss aversion, and how they shape our behavior. This could not be more relevant for underwriters, given that we regularly need to decide – often quickly or under duress – on which risks to wager our companies’ bottom line. At the end of the day, getting a better grasp on the way we frame our underwriting decisions will keep us away from that long shot and closer to the safe bet. Originally published by the copyright holder, General Reinsurance, and reprinted with its permission.

Having worked in and around Asia for the past few years, I have seen microinsurance be a constant topic. I always found the concept of microinsurance (and microfinance) very interesting. However, I didn’t fully understand it. Fortunately, Peter Gross from MicroEnsure helped to give me more insights into this fascinating and extremely important concept. The following article is based on my conversation with Peter. Who Is Peter Gross? Peter is currently the director of strategy with MicroEnsure. Peter started with MicroEnsure in 2010 as the general manager in Ghana. Previously, Peter had a variety of management roles in McMaster-Carr. When I asked Peter about why he moved from a company like McMaster-Carr to MicroEnsure, his answer was simple: "I wanted to work in a social enterprise and use my business skills in a developing context." Peter’s wife is also in public health, working for the Centers for Disease Control and Prevention (CDC). Having an alignment of interests and values is important for any partnership, personal ones included. Hence, moving to Ghana to help with both the protection and providing of care was an easy decision for the couple. What Is Microinsurance? One of the comments that stuck with me most during my conversation with Peter is on the definition of microinsurance. He explained that he is trying to get away from that term and refer to it more as "insurance for emerging customers." The main reason is a desire to get away from the perception of "micro-price vs. micro-value." These types of products are specifically designed for an underserved population that typically can’t get access. That is the core of microinsurance. For people in these markets, Peter said, "Good-quality insurance is very important because they face more day-to-day risks than you and I.…. They get really excited about insurance and the role it plays to protect them." Microinsurance is primarily bought in some of the fastest-growing areas of the world, including these six countries from Africa and four from Asia: [caption id="attachment_30091" align="alignnone" width="570"] Source: https://www.theatlas.com/charts/BJOKD67VG[/caption] The blend of under-penetration plus fast growth shows a lot of opportunity for microinsurance in these areas, one which MicroEnsure is very aware of. See also: A ‘Nudge’ Toward Microinsurance   What Is MicroEnsure? MicroEnsure is a specialist provider of insurance for customers in emerging markets and has registered more than 55 million customers in 10 different countries in Asia and Africa. MicroEnsure designs, builds and operates their business by having products that are simple to understand and with distribution partners that can help to reach the masses. They don’t carry the risk themselves and partner with more than 70 different insurers. Their biggest shareholder is AXA, alongside Omidyar Network, IFC and South Africa’s Sanlam. Because the majority of the consumers in these markets do not have any insurance, Peter indicated to me that the marketing strategies that they deploy help them to introduce an insurance solution and meet an untapped need. An example of this was when Peter first moved to Ghana. The company partnered with Tigo Telecom to offer free life insurance. The process worked like this:

1. Customer dials *123 to sign up
2. The more the customer spends on telecom services, the more insurance the customer receives (up to a maximum of $500)

Simple, right? Peter told me that they started seeing customer behavior changing, especially when customers started seeing claims paid. This caused these consumers to not only want to spend more on airtime with the telecom to get more life insurance, but to get coverage for other risks. This helps to show what has made MicroEnsure so successful:

• Identify a need
• Introduce a solution
• Make that solution readily available and accessible
• Introduce more solutions
• Make those solutions readily available and accessible
• Repeat

What Else Does MicroEnsure Offer? As with any market, the range of products available to consumers can vary. Product development typically starts with life, personal accident and hospital. Policies to pay for funeral expenses and protection of property and crops are quite popular, too. Coverage for other risks, such as political violence, can also be marketed, depending on the country. As more consumers have mobile phones, mobile device cover is trending upward, too. If the product fulfills the need to the consumer and is simple to understand and easy to market/get access to, then it will be considered. At the same time, Peter made clear to me that MicroEnsure needs to be extra careful in building its products. Because the risks their consumers face are higher, the risk exposure for them and their insurance partners are also higher. The company needs to ensure that they build in features that are both easy to understand and tougher to game. This can be a tough balance to meet, but one that needs to happen to ensure that they can continue to provide this valuable solution for their consumers. What Role Does Technology Play? Good technology is part of the key to MicroEnsure’s success. Peter shared that this is both from a distribution and operational perspective. For distribution, products need to be able to be offered and distributed through the masses. Making an easy-to-purchase process over mobile or other e-platforms is critical. An application has to be not only simple to fill out but also easy to understand. From an operational perspective, Peter explained that MicroEnsure needs to assume a lot of mistakes on the data input from the consumer. As such, they need to build in certain tolerances on imperfect data to make it clean. This is crucial, especially for the payment of claims. Peter said MicroEnsure’s technology is fully API-enabled and can be easily plugged into their distribution partners, whether it be banks, telecoms or others. Their systems are modular, meaning partners can use various components, such as the policy administration system, claims system or messaging system, only as needed. See also: Big New Role for Microinsurance   Other Insurtechs to Watch in Microinsurance I asked Peter who some of the other insurtechs in the space are to take a look at. He gave me three:

1. BIMA, which just had an investment of $100 million from Allianz
2. Ayo
3. Acre Africa

Summary This was a fascinating conversation with Peter, and I learned a lot from it. I have a ton of admiration for the work Peter and MicroEnsure are doing. I’ve worked in mature markets as well as emerging ones (I would say Malaysia is right in the middle). There are complexities in both types of markets. What interested me the most from my conversation is the combination of being able to provide coverage for the un/underinsured, focusing on their specific needs and making them excited to be getting insurance. I feel that insurance is a very important product, for all people. In places like the U.S., insurance can often be looked at by consumers as boring and an unnecessary evil (until they need it, of course). Insurtech is helping to change that perception in the Western world and mature economies. For those in emerging markets, insurtech helps with access and a level of coverage that many have never experienced before in their lives. Now that is something exciting and meaningful. This article first appeared at Daily Fintech.

Marketers play a pivotal role in the success of insurance carriers, but that success is under threat. Profitability is at risk because the marketplace is highly competitive; many policyholders shop and switch to a new carrier long before the original carrier is able to recoup the cost of acquisition. To understand the dynamics of the marketplace, LexisNexis Risk Solutions surveyed marketers, underwriters and product managers at the top 50 auto, home and life insurance carriers and found that, to succeed, marketers and underwriters need to be on the same page. The study uncovered three key takeaways, which can help these teams overcome their challenges and improve their overall acquisition and retention success rate. 1. Understanding Insurance Team Responsibilities Improves Results It should come as no surprise that insurance marketers are distinctly different from their underwriting and product management counterparts. While profitability was the No. 1 metric for all groups in the survey, marketers identify cross- and up-selling to current customers, meeting sales quotas and retaining customers as their top three goals. Underwriters and product managers also identified these three objectives as top priorities for marketers. Conversely, underwriters and product managers identified their own top goals as enhancing existing products and creating new ones. Likewise, marketers agreed these were the most important goals for underwriters and product managers. See also: How Acquisitions Are Reshaping Landscape   While it is reassuring that both camps have a clear understanding of each other’s top priorities, an interesting disconnect that emerged from the study was that only 18% of marketers nominated "obtaining an optimal spread of loss exposures" as a core business goal for themselves, and 43% of project managers and underwriters nominated "obtaining an optimal spread of loss exposures" as a core business goal for their marketing counterparts. Does this suggest that underwriters and product managers want marketers to be more driven by obtaining an optimal spread of loss exposures? 2. Collaborating Is Essential While many marketers recognize the need for cross-functional collaboration, far fewer excel at actually doing it. As part of the research, the respondents were quizzed on their relationships with counterparts. The results were clear: 94% of respondents said that working more collaboratively was either “extremely important” or “important.” This suggests a willingness to embrace closer working relationships to achieve business goals. However, this resounding endorsement for working hand-in-hand seems to be contrary to reality. Only four of 10 teams reported that they build their strategies together. Given the challenging market dynamics, it seems counterintuitive for these teams to recognize the value of collaboration yet fail to embrace it within their organizational culture. So, what’s going on? 3. Teams Need to Be in Sync for Customer Acquisition and Retention Insurance marketers live in an imperfect and challenging world. Not every acquisition strategy will draw all the right customers. Nor will every retention program keep valuable policy holders. However, the survey's results were eye-opening: 43% of marketers said they were not completely satisfied with how underwriters and product managers executed acquisition and retention strategy, and 46% of underwriters said the same of marketers. See also: Underwriters Need Some Power Tools   While neither group disparages the other’s performance or efforts, the results clearly show that both camps are eager for improvement. Key Takeaways Through collaboration, marketers are better able to target policyholders with retention in mind. Acquiring longer-term policyholders delivers the promise of greater opportunity for profitable growth for carriers. Clearly, cross-functional collaboration is rapidly becoming a strategic imperative within the insurance industry. The good news is that teams are willing and eager to embrace it in pursuit of high-return opportunities and to achieve the greatest value from that collaboration. At the end of the day, it’s one team both on and off the field. And increased collaboration between marketing, underwriting and product management teams allow all teams to better align their strategies for more profitable growth. For more information, please refer to the white paper Collaborate Across Function to Acquire with Retention in Mind.

An industry cannot thrive without new ideas and talented people to lead it into the future. That’s why I believe there must be an educational program for individuals entering the insurance business. It has become increasingly evident over the past several years that we’re confronting the twin problems of an aging workforce and a dearth of new professionals. It’s crucial for industry veterans and leaders to elevate and accelerate this conversation. We must advocate for and help build academic programs, apprenticeships and on-the-job training opportunities that lay the foundation for success — as well as continue to teach insurance professionals throughout their careers. It’s up to us to shape a more vibrant future. It’s common for aspiring professionals to graduate from business school and then be left to fend for themselves when it comes to getting licensed and starting work. This limited training rarely teaches students the range of theories, skills and legal requirements necessary to understand such a technical industry. Institutions like the University of Pennsylvania and the University of Georgia offer an emphasis in risk management, but it only accounts for a handful of classes in a general MBA program. I’d like to see more colleges and universities create programs focused on risk management alone. Insurance experts can help academics design curricula explaining the richness and variety of the industry. The career can encompass many specializations, from sales agent to claims manager and underwriter to evaluation specialist. Students should be exposed to these exciting career possibilities. See also: 4 Keys to Charting Your Career   Academic institutions are beginning to shift in the right direction. In 2006, 58 risk management degree programs prepared 1,562 graduates to become insurance specialists. That number climbed to 112 programs with 1,870 graduates by 2010. Despite that rise, the programs still account for only a fraction of the more than 4,600 degree-granting post-secondary institutions in the U.S. that enroll more than 20 million students. We can do better. Our focus should be on building more academic programs to attract more students and better preparing them to join our ranks. To best equip students, it’s imperative that we augment classroom learning with apprenticeships and on-the-job training. Even after 44 years in the industry, I still learn something every day. Every time I reach a career milestone, I’m reminded of how wrong I was to think that at year five or year 10 — or even year 20 — I knew all there was to know about the industry. By offering apprenticeships, insurance companies can provide students and new graduates with an invaluable learning environment. This learning shouldn’t stop after the first couple of years on the job, either; we should design early- and mid-career training courses to keep our colleagues engaged and to reward the dedication of not only the students, but also the instructors. The average age of an insurance agent in the U.S. is 59, and a quarter of the industry’s workforce is expected to retire by the end of this year. It’s imperative that these industry mainstays pass their valuable institutional knowledge along to students and colleagues with less experience. Only 4 percent of millennials view the insurance industry as a potential career choice. Young professionals harbor the opinion that the insurance industry is inherently boring. If such a small fraction might consider insurance for a career, how is it possible to combat the stereotype that the industry is boring without established educational programs? Therein lies our challenge: It’s up to those of us in high-level positions to forge a more formal career path and teach the next generation how fulfilling the insurance industry can be. There are some instances in which the industry excels at recruiting and retaining young professionals. Agents under age 40, or with less than five years of experience, can join the Young Agents program — a section of the Independent Insurance Agents and Brokers of America. The program allows members to connect with various professionals, attend conferences and access helpful resources. Young Agents furthers early-career employees’ engagement and illustrates the many avenues for advancement and success in the industry. But we still need an unwavering commitment to comprehensive education. Insurance companies have to prioritize and invest in academic programs that maximize students’ knowledge — and employee retention. See also: 3 Reasons Millennials Should Join Industry   Our industry is about ensuring the health, happiness and dreams of individuals. When we join the insurance industry, we inherit the responsibility of protecting what people value most. No amount of time in the industry can allow us to take that responsibility lightly. We must look beyond the sense of duty we might feel toward our current clients and begin preparing the agents who will come after us. Only then will they be able to reliably and proficiently serve our future clients. It’s up to our industry to train, educate and provide experience and teachable moments to foster the growth of new graduates and transform them into well-trained agents. We must help our colleagues attain their hopes and dreams, too.